The Canadian dollar lost the most in a week since June as increasing evidence the economy is faltering added to speculation the Bank of Canada will signal it may cut interest rates this year.
The currency sank against all of its 16 major peers as employment unexpectedly fell in December. It touched a four-year low against the U.S. dollar. Canada’s trade deficit swelled to nine times what economists forecast, fueling concern the country may not be able to rely on exports to boost growth. Crude oil, the nation’s biggest export, fell. The central bank will release surveys next week on business sentiment and credit conditions.
“The Canadian dollar was the big mover and the big underperformer among Group of 10 currencies this week,” said Greg Anderson, head of G-10 currency strategy at Bank of Montreal, by phone from New York. “Commodity-price weakness and economic malaise in Canada, along with a policy preference for a weaker currency, had the market looking to short Canada dollar.” Shorting is betting that an asset will fall in value.